Crest Nicholson rejects approach from Jeff Fairburn-led Avant Homes

A housebuilder run by former Persimmon boss Jeff Fairburn and controlled by a New York hedge fund has made a bid to buy Crest Nicholson, according to media reports.

Last month, Crest Nicholson said it had rejected two offers from larger rival Bellway in the spring.

Now Avant Homes, which according to Building’s list of Top 50 Housebuilders had a turnover of £667m last year, is understood to have made an offer for the firm in June, according to Sky News.

The proposed deal would see Avant, led by Fairburn, merged into Crest Nicholson, which would retain its Stock Exchange listing with New York hedge fund Elliott as its largest shareholder. The shareholder ratio would be 70:30 in Crest Nicholson’s favour.

Under Bellway’s second rejected £650m deal, Crest Nicholson’s shareholders would have received 0.093 shares in Bellway for each share they hold, with an implied value of 253 pence per share with a premium of around 18.8%. Crest Nicholson would have held 17% of the enlarged group’s share capital.

Under Stock Market regulations, Bellway has until next Thursday (11 July) to return with a new offer or withdraw from the takeover bid.

If it does come back with a bid, it could trigger a bidding war for £900m- turnover Crest Nicholson.

In an update to the Stock Exchange on Friday afternoon, Crest said: “The Board of Crest Nicholson notes the recent press speculation and confirms that it has received unsolicited, preliminary, indicative proposals from Avant Homes regarding a possible all-share combination of Crest Nicholson and Avant.

“The Avant proposal implied Avant shareholders, including its main shareholder, Elliott Investment Management, would own approximately 30 per cent of the enlarged group.

“The Board of Crest Nicholson evaluated the Avant proposal with its financial advisers, Barclays and Jefferies, and concluded it was not currently minded to engage in discussions regarding a potential transaction with Avant while in an offer period in relation to a possible all-share offer from Bellway plc. Accordingly, the Board of Crest Nicholson sent a letter to Avant on 27 June 2024 setting out its decision and explaining its position.”

In a note sent out before Crest’s update, broker Investec said: “There appears to be more competition to acquire Crest. As we previously wrote, we would not be surprised to see a revised offer be forthcoming from Bellway. We see the logic for Avant Homes’ interest given that it would facilitate a public listing [but] there is room for Bellway to come back with a higher offer.”

Fairburn is well known in the housing industry having been chief executive of Persimmon for five years before leaving in 2018 over controversial plans to award him a £110m bonus.

Last month, Crest Nicholson announced it made a £31m pre-tax loss in the six months to April, compared to a £28m profit the previous year. Revenue was also down 9% year-on-year to £257.5m. The figures have been impacted by Crest Nicholson discovering it needs to spend £31.4m to fix build defects.